If We Had Some Ham

More than anything else, Lawrence Summers’s and Anna Stansbury’s Washington Post op-ed making the argument that the way to reverse the declining share of income claimed by labor is to increase the power of unions, reminds me of the old vaudeville joke: “If we had some ham, we could make a ham and cheese sandwich if we had some cheese.” Consider:

Economic analysis often ascribes these trends to some combination of globalization, technological change and rising monopoly power. But our research suggests that a more compelling explanation is the broad-based decline in worker power. As workers have become less able to share in the profits generated by their firms, income has been redistributed from employees to the owners of capital. That has contributed to higher income inequality along class and race lines.

The evisceration of private-sector unions is the most obvious example of the decline in worker power. At the peak, one-third of the private-sector workforce belonged to a union; that number is now 6 percent. But other factors also affect the degree to which workers can share in firms’ profits. Because of increased shareholder activism, rising levels of debt, increases in private equity and changing corporate norms, businesses are increasingly run for shareholders rather than their stakeholders. Ruthless management tactics involving precise measurement of workers’ day-to-day activity have become widespread.

Meanwhile, workers at large firms or in highly paid industries (such as manufacturing, construction or transportation) used to earn large wage advantages, as they shared in the profits generated by their companies, but these benefits have declined by half since the early 1980s. An increasing number of workers are outsourced domestically, employed by staffing or temp agencies or misclassified as independent contractors, reducing their ability to share in the profits of the main firm they work for. And the real value of the minimum wage is lower than it was in the 1970s.

Why did this happen? Some portion of the decline in worker power may have been an inevitable outcome of globalization or technological change. But our research — which examines shifts in labor shares and corporate profits across different industries — indicates that changes in policy, norms and institutions are the most important explanatory factors. This view is supported by the fact that the legal and political environment has been tilted substantially in favor of shareholders and against workers since the 1980s, a trend exemplified by the expansion of state right-to-work laws undermining unions’ ability to fund themselves and the increasing corporate use of union avoidance tactics, both legal and illegal. The fact that the decline in unionization, the rise in income inequality and the fall in labor’s share of income have all happened to a greater extent in the United States than in much of the rest of the industrialized world also suggests an important role for U.S.-specific explanations.

See what I mean? The decline in bargaining power is less a consequence of globalization, technological change, or consolidation than it is due to reduced workers power which is due to globalization, technological change, and consolidation. If you read very carefully you can ferret out their proposals for remedying the situation:

  • Eliminate right to work laws
  • Ensure that workers that aren’t actually independent workers are not classified as such
  • Sector level collective bargaining

Fair enough. How? Constitutional amendment? And how do they propose to reduce offshore outsourcing in the face of rising U. S. labor costs? I genuinely want to know.

The art of making policy resides in identifying the alternatives, weighing their costs and benefits, and pursuing the most doable. Contrary to Dr. Summers I would attribute the decline in union power overwhelmingly to globalization, technological change, consoolidation and their run-on effects as well as the following:

  • Union corruption
  • Obeisance of the unions to the Democratic Party even as the party abandoned policies that bolstered workers’ power in favor of neoliberal policies.
  • The adversarial relationship between organized labor and corporations built into our legal system.
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We Are Not Alone

Have you ever seen Close Encounters of the Third Kind? What’s it about? Don’t recap its plot for me—what’s it about? I think it’s about awe—the ability to look at the night sky and see wonder and adventure and magnificence. I just finished watching a movie, streaming on Amazon Prime, that covers some of the same territory as Close Encounters. In my opinion it is a better movie, better acted, more affecting, and was probably made for 1% of the budget of Close Encounters. The movie is Cosmos (2019).

If your idea of a great science fiction movie is anything directed by Michael Bay or produced by James Cameron do not waste your time with Cosmos. You will hate it. There are no big name Hollywood starts, no explosions, no stunning digital effects, no sex, no nudity. Most of it is just three guys shot in a car. In it.

If the future of movies is something that can open simultaneously in 5,000 cineplexes and will appeal to the Chinese audience, IMO movies have no future. If the future of movies is more like Cosmos, the future is bright.

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Bringing the Supply Chains Closer to Home

I wanted to draw your attention to an article by James Clad in The National Interest striving to make a case for “American-based supply chains”:

The drive for efficiency initially took shape in the time-and-motion productivity studies of the late Forties. By the 1980s, it had led to the tyranny of “just-in-time” inventory management. Now, under pandemic conditions, the resulting supply chains have been stretched to their breaking point. Does a simple resumption of a tireless pursuit of cheap/cheaper/cheapest really offer the best hope for a durable recovery?

If reducing consumers’ retail costs has become the all-defining metric, then the maintenance of product and service quality has taken secondary importance in our manufacturing economy. Post-pandemic vulnerabilities have become so apparent in critical supply chains that we cannot evade a comprehensive re-think.

I’m not particularly sanguine about “American-based supply chains” but I think it’s a practical necessity that we draw our supply chains, particularly for strategically important materials, closer to home. This, for example, is unconscionable:

For over fifteen years, China has made mining and mineral processing a strategic priority; meanwhile, a broken U.S. mining regime has crippled a once-dominant industry. The figures say it all: U.S. mineral import reliance has more than doubled over the past twenty-five years. China now controls the supply of twenty-three of thirty-five minerals deemed “critical” by the U.S. departments of defense and interior.

These minerals—cobalt, graphite, lithium and various rare earths—comprise the building blocks of renewable energy technology. Recent World Bank analysis shows how demand for minerals essential to wind and solar power (as well as for lithium-ion batteries and electric vehicles) will increase by at least 500 percent by midcentury. Our national decarbonization effort, as well as more global ambitions, depend on a global production ramp-up of key minerals over which China has asserted monopoly control.

and not only eminently doable but should be able to draw bipartisan support. Cobalt is one thing but rare earths another. Not too long ago the U. S. was the world’s greatest producer of rare earth elements. That has changed not because we no longer have any (everybody has them) but because they’re dirty and an ill-considered environmental policy has driven them to China where they are tidily out of sight. They’re not any cleaner or more efficient for being there but they have removed to a place where they are beyond our ability to control or reform.

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What Did the ARRA Do?

Following up on my previous post, one way of ferreting out the likely effectiveness of an infrastructure spending program is to consider the results of previous programs. Fortunately or unfortunately as the case may be, we have a fairly recent example in the American Recovery and Reinvestment Act of 2009 (ARRA). As you might guess there’s some dispute over just how effective it was.

John Taylor, for example, wrote this for the National Bureau of Economic Research (NBER):

The implication is not that ARRA has been too small, but rather that it failed to increase government consumption expenditures and infrastructure spending as many had predicted from such a large package. A consideration of the counterfactual event that there had not been an ARRA supports the hypothesis that state and local government borrowing would have been higher and purchases would have been about the same in the absence of ARRA.

or, in other words, it didn’t achieve much at all. Daniel J. Wilson on the other hand, writing for the Federal Reserve Bank of San Francisco (PDF) comes to a somewhat different conclusion:

Based on my preferred measure of spending, announced funds, the results imply that its first year ARRA spending yielded about eight jobs per million dollars spent, or about $125,000 per job. Extrapolating from that marginal local effect to the national level, the estimates imply ARRA spending created or saved about 2.1 million jobs, or 1.6 percent of pre-ARRA total nonfarm employment, in that first year.

Some of that priciness might be explained by the significant number of the “jobs saved” having been on jobs in the financial sector, whether private or public. Was saving 800,000 jobs in the financial sector a social good or not? I think not but YMMV. Finally, writing for the Federal Reserve Bank of Philadelphia (PDF) Gerald A. Carlino arrives at a conclusion closer to my own than either of the foregoing:

Did the Recovery Act work? The evidence suggests the economy did indeed grow more than it would have without the stimulus but likely not as much as it might have with a different type of stimulus. In particular, the evidence suggests that direct measures — tax relief for households and firms, and programs such as Medicaid that target families with low incomes, little wealth, and a limited ability to borrow — have contributed more to GDP growth than direct federal expenditures or project aid to state and local governments. To the extent that the federal government implements its stimulus spending through transfers to state and local governments, perhaps that aid should target lower-income households and states that bear the brunt of the economic downturn.

Just as there’s a difference between the United States of 1935 and that of today, there’s a difference between that of 2010 and that of today and IMO our economy, more dependent if anything on imports than it was then, is likely to benefit less from an infrastructure spending program while our trading partners are likely to benefit more. Unless the construction of the program is very, very deliberate, something in which the Congress has shown little interest.

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The Trouble With Infrastructure Spending

Although some Americans romanticize the New Deal infrastructure spending programs and their attendant work programs, the WPA and the CCC, the facts of those programs is a bit more problematic, as this article by Allison Schrager at City Journal points out:

Almost 27 percent of New Deal grants went to work programs, specifically for out-of-work Americans, who completed small-scale construction projects at a set wage with limited hours. Another 17.8 percent of spending involved large-scale projects, like roads and dams, that paid market wages and hired from the broader labor market. But the New Deal’s success in these areas was mixed. The public-works projects, for example, had a multiplier of about one—that is, for every $1 the government spent, it translated into about $1 of income. Though New Deal public-works programs did reduce deaths and crime, it’s important to remember that they preexisted large-scale unemployment insurance. So, while they saved people from dire poverty, they’d be less beneficial today because we have a better safety net. Evidence also suggests that the projects didn’t lead to job growth in the private sector and may have hindered it, since the government jobs paid more and were considered more stable.

We have good reason to expect even less success from similar-type efforts today. Economists estimate that states with big New Deal projects didn’t experience much growth because 50 percent of the materials used in construction came from other states. Today, those materials would probably come from abroad and therefore have even less economic benefit to America’s economy (and Buy America provisions won’t help, either). Regulation and red tape have grown substantially since FDR’s time, too, and that would slow the process and make building less efficient. In addition, construction jobs have become more skilled and technical since the Depression era. It’s hard to imagine unemployed hotel concierges making an easy transition to a job building a railway to LaGuardia.

In addition much of the benefit that people attribute through the glow of hindsight to those infrastructure spending programs actually resulted from the increase in savings during World War II:

There are some other factors unmentioned by Dr. Schrager. Our country and economy have changed enormously since the 1930s. Then we were a country in which most people lived in rural areas, many of them farmers, and we didn’t have a nationwide system of highway. Instead we had a patchwork of local roads, subsidized for some of their length by the federal government. Much of the country didn’t have electricity or telephones and the power transmission system was strictly a local affair.

Now those rural areas are underpopulated although that may change soon. If anything we’re overbuilt in roads and bridges. Neither repairing unused roads and bridges nor building new ones are good investments. If they were, state and local governments would be making them. Private companies would be demanding them.

If we are bound and determined to begin a large infrastructure spending program, by all means let’s do it in areas that will provide the most bang for the buck. Let’s not build roads that will be useless in a few years or high speed rail to airports that will never be used. I’m thinking of things like a more resilient, distributed power system or closing the “digital divide” with a cheaper, better Internet access available to more people (something local and state governments as well as private companies are investing in). And let’s insist on a “Buy American” component to it as well, especially with respect to the raw materials used. More about that later.

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Learning From History

Pulitzer Price-winning Chicago Tribune columnist Clarence page is black. Mr. Page collects racist memorabilia. In his latest Trib column after recounting how he began his collection he continues:

At home, I put it on a visible shelf next to my old cast-iron Aunt Jemima penny bank that my parents gave me when I was 4 or 5, to help me start saving money for college. I had one of those mothers who believed that life begins after you finish medical school. (Sorry, Mom. I tried.)

We loved our Aunt Jemima bank, partly because it reminded my mother of her “Aunt Laura,” which quickly became what we called our bank instead of “Aunt Jemima,” which in our community often was denigrated into a slur — like the overly maligned “Uncle Tom” or Uncle Ben, whose rice box image Mars Inc. is dropping.

I later found I was not alone as a collector. As previously whites-only jobs opened up for people of color and the Black middle class doubled in size by the late 1980s, so did the collectors’ market for Black memorabilia, including racially charged memorabilia.

The sheer magnitude of it attests to how ferociously the forces of post-Civil War backlash wanted to put Black men and women back in our “place,” suppress our political power and erase our culture, even as some of them enjoyed our music.

For example, thanks to one friend, I now have a toothpick dispenser shaped like an alligator with a single toothpick in its mouth, which features the head of a horrified minstrel as a handle.

I also have a coin bank figurine of a red-jacketed bellhop with a coin in its outstretched hand that, with a flip of one of its ears, lifts the coin to his opening mouth.

and concludes with this prudent advice:

Today some of these relics, old and new, can be found in the National Museum of African American History and Culture and even more plentifully in the Jim Crow Museum at Ferris State University in Big Rapids, Michigan.

Founder and curator David Pilgrim says he started out much as I did, with one piece of stereotypical coon-show art that revolted him. But he stuck with it as a useful vehicle for public education. We Americans should try to learn from it, I agree, not bury it.

We are at a historical moment of worldwide protests against police brutality and systemic racism, following the death of George Floyd in the custody of Minneapolis police. In this moment of reckoning, we should appreciate what racial souvenirs tell us about how far we have come, so we have a better idea of where we’re going.

George Santayana was right about the past and there are worse things than being offended by it. Rather than trying to bury the past perhaps those who find our past intolerably painful owe it to themselves to find a country without such a past. If they can find one.

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Reality Check

At Vox.com Roge Karma reviews four ideas for “replacing traditional police officers”. The ideas are:

  1. Create a distinct unarmed unit for enforcing traffic laws.
  2. Use community mediators rather than the police to handle minor disputes.
  3. Create a mobile crisis response unit (rather than ordinary police officers—a “Sweeney”).
  4. Experiment with community self-policing.

concluding:

There’s no guarantee that any of these suggestions will succeed across the board. When it comes to policing alternatives, even the best existing models haven’t been attempted at scale, and there’s no telling how different communities will respond to them. To implement any idea on this list would mean venturing into relatively uncharted territory.

That means there will be failures. Things will go wrong. Systems will break down. Programs will fall apart. Violence may temporarily increase in some places. Occasionally, a violence interrupter or mobile crisis worker will be seriously injured or killed.

But our current system already represents a kind of profound failure. We live in a country that has built the largest system of human incarceration on earth, where agents of the state kill unarmed members of the communities they are supposed to protect and terrorize those who are still alive. Where peaceful protesters are beaten in the streets.

The question, then, isn’t whether we are willing to live with failure; communities across the country already live with failure every single day. That failure, at least in part, stems from the fact that police officers in the United States are tasked with responsibilities — from traffic patrol to mediation to crisis response — that amplify the risk of unnecessary violence.

I’ve expressed my own views of the deficiencies of modern policing on a number of occasions in the past. For example, active policing does not seem to have a deterrent effect on crime. Chicago, for example, has the largest number of police officers relative to the population of any major city and also the highest rate of violent crime. Whether cause or effect you cannot reasonably conclude that more police means less crime.

I have only two additional observations. We are the largest country in the world with an ethnically, racially, and confessionally diverse population. As such we are bound to have special problems.

I’m also curious about something. If disarming or disbanding the police is such a good idea, why are the bodies that are doing it hiring armed private security guards?

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The Revolutionary Moment

Andrew Sullivan recognizes a “revolutionary moment” when he sees one as he points out in his latest piece for New York Magazine, as well as its attendant excesses. After noting the iconoclasm (as I point out), “confessions of iniquity”, and social policing, features shared by every radical revolution, e.g. the French, Russian, and Chinese revolutions, he turns to language:

Revolutionaries also create new forms of language to dismantle the existing order. Under Mao, “linguistic engineering” was integral to identifying counterrevolutionaries, and so it is today. The use of the term “white supremacy” to mean not the KKK or the antebellum South but American society as a whole in the 21st century has become routine on the left, as if it were now beyond dispute. The word “women,” J.K. Rowling had the temerity to point out, is now being replaced by “people who menstruate.” The word “oppression” now includes not only being herded into Uighur reeducation camps but also feeling awkward as a sophomore in an Ivy League school. The word “racist,” which was widely understood quite recently to be prejudicial treatment of an individual based on the color of their skin, now requires no intent to be racist in the former sense, just acquiescence in something called “structural racism,” which can mean any difference in outcomes among racial groupings. Being color-blind is therefore now being racist.

And there is no escaping this. The woke shift their language all the time, so that words that were one day fine are now utterly reprehensible. You can’t keep up — which is the point. (A good resource for understanding this new constantly changing language of ideology is “Translations From the Wokish.”) The result is an exercise of cultural power through linguistic distortion.

So, yes, this is an Orwellian moment. It’s not a moment of reform but of a revolutionary break, sustained in part by much of the liberal Establishment. Even good and important causes, like exposing and stopping police brutality, can morph very easily from an exercise in overdue reform into a revolutionary spasm. There has been much good done by the demonstrations forcing us all to understand better how our fellow citizens are mistreated by the agents of the state or worn down by the residue of past and present inequality. But the zeal and certainty of its more revolutionary features threaten to undo a great deal of that goodwill.

The movement’s destruction of even abolitionist statues, its vandalism of monuments to even George Washington, its crude demonization of figures like Jefferson, its coerced public confessions, its pitiless wreckage of people’s lives and livelihoods, its crude ideological Manichaeanism, its struggle sessions and mandated anti-racism courses, its purging of cultural institutions of dissidents, its abandonment of objective tests in higher education (replacing them with quotas and a commitment to ideology), and its desire to upend a country’s sustained meaning and practices are deeply reminiscent of some very ugly predecessors.

concluding:

But the erasure of the past means a tyranny of the present. In the words of Orwell, a truly successful ideological revolution means that “every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.” We are not there yet. But unless we recognize the illiberal malignancy of some of what we face, and stand up to it with courage and candor, we soon will be.

As with prior radical revolutions no good will come of this one. The French who beheaded a king in 1793 accepted an emperor ten years later, setting the stage for a century and half of revolutions and wars in which they were repeatedly humiliated by the Germans.

Today’s would-be revolutionaries, like most of their antecedents, have little sense of irony. They don’t recognize the irony, for example, of a handful of blacks telling all other blacks what they should want or, worse, a handful of whites telling blacks what they should want. That irony was not lost on BET founder Robert Johnson who pointed out how meaningless removing statues of Confederate generals is to black people living in America today.

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Trump Campaigns Against Lightfoot

And Pritzker. From a letter from President Donald Trump to Illinois Gov. J. B. Pritzker and Chicago Mayor Lori Lightfoot:

Unlike previous Administrations of both parties, I am willing to tackle unsolved challenges. If you are willing to put partisanship aside, we can revitalize distressed neighborhoods in Chicago, together. But to succeed, you must establish law and order. The combination of crime, high State and local taxes, and onerous State and local government regulations have caused thousands of Illinoisans to flee to other States. Between 2010 and 2019, Illinois lost more of its population than any other state in the Nation. If you are interested, I am willing to ask members of my Cabinet to meet with you and help devise a plan to make Chicago safe, since a successful formula has escaped both you and your predecessors. My Administration would also welcome the opportunity to engage with you and your colleagues as you develop bipartisan policy recommendations to improve policing and make our great cities safer for all.

Unfortunately, you continue to put your own political interests ahead of the lives, safety, and fortunes of your own citizens. The people of Chicago deserve better.

Perhaps I’m too cynical but I think that is what is called “trolling”. Ironically, the most likely outcome of the letter will be to strengthen Pritzker and Lightfoot politically.

For additional context you might want to read this old article in Chicago Magazine. Chicago city government is not merely a passive victim of gang violence—it’s up to its hips in it. IMO If Gov. Pritzker and Mayor Lightfoot were shrewd they’d take the president up on his offer if for no other reason than to be able to criticize it. I’m guessing they’ll just fulminate about the slight and criticize a hypothetical offer they would never accept anyway.

Update

And they’ve responded! From WGN. Mayor Lightfoot:

It is despicable, disgusting and all too typical. Same old tired playbook. How about some leadership not steeped in the divide and conquer tactics?

and Gov. Pritzker:

The people of this state and this nation have unfortunately come to expect his unhinged attempts to politicize tragedy with his predictable and worn out strategy to distract, distract, distract.

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You Can All Go to Hell

In an op-ed in the Wall Street Journal Peter Reed, founder and CEO of Reed Teams, declaims:

I’m moving my business headquarters off the West Coast. We tried San Francisco. We tried the Seattle area. Both were wonderful in their own ways, especially in natural beauty and personal friendships. But both have become hostile to the principles and policies that enable people to live abundantly in the broadest sense.

That’s why my company is in the final stages of purchasing office space in Austin, Texas. By the end of the year, I hope to move dozens of employees to the Lone Star State and to be ready to hire hundreds more. While uprooting a big part of a billion-dollar company isn’t easy, the decision to move to Texas wasn’t hard. Our staff and their families will be able to flourish to a much greater extent.

and

I’ve talked with many entrepreneurs in California, Washington and Oregon who have encountered similar issues. Most aren’t sure how to respond. Generally, the amount of tech talent and funding on the coast leads them to conclude that they have no choice but to stay put and stay silent.

I reject that answer. The biggest talent pool in the world doesn’t matter if the ocean that surrounds it is intellectually shallow. If a business is based in a place that expects social and political conformity, then innovation will falter eventually, because it depends on pushing the boundaries. And if our people find it hard to flourish in every aspect of their lives, then the company will struggle in the long run. I think that as the West Coast becomes more insular and exclusive, other parts of the country will become the biggest drivers of tech innovation.

That’s why we’re leaving the West Coast and heading to Texas.

I was reminded of Davy Crockett’s famous snort, “You can all go to Hell and I will go to Texas”. He isn’t alone. In raw numbers Texas and Florida lead the country in net domestic inmigration while in percentage terms Idaho, Nevada, Arizona, and South Carolina lead the pack.

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